APIs Key To Understanding High-Priced Internet Stocks: Google Inc (GOOG)

The hottest tech term of our time is the Application Program Interface, or API. It’s time for Foolish investors to get hep to this jive.

An API is simply a programming method for using some larger programming framework. It’s a shorthand. Instead of writing a complex program to address, say, Google Inc (NASDAQ:GOOG) Maps, you use the API and get your job done in a fraction of the time.

Google Inc (NASDAQ:GOOG)Google Maps, by the way, may be the most valuable play on the API board. If you want to know why Google Inc (NASDAQ:GOOG) is trading near its record highs, after languishing for some time, the answer lies in its APIs.

The Value of an API is its Use

APIs are now the most valuable bits of programming real estate on the planet. But their value, as with open source, is based on how many people are using it, and the degree of their commitment to them.

Twitter is now worth $10 billion, pre-IPO, mainly because of its API. Many companies are using Twitter data for various forms of market research – the API makes it easy.

Codingthis compiled a list of the 10 essential APIs back in 2010 and it’s illustrative of how fast this world changes. Most are pretty obvious – Google Inc (NASDAQ:GOOG) Maps, Yahoo! Inc. (NASDAQ:YHOO)‘s Flickr, and Facebook Inc (NASDAQ:FB) are all represented – but some are less so, like Delicio.us, Digg, and Feedburner, which has faded in importance under Google Inc (NASDAQ:GOOG)’s ownership.

In other words, the list of key APIs is subject to change. Investors who track APIs can benefit from seeing the changing landscape.

Google Inc (NASDAQ:GOOG) Dominates the API World

Programmable Web‘s list of the most used APIs lists literally dozens of Google APIs, but the key properties are at the top of the list – Google Maps, Twitter, Google YouTube, Yahoo’s Flickr, Amazon.com, Inc. (NASDAQ:AMZN) eCommerce and Facebook.

Notice a company missing from the above lists? Now you know why Microsoft is trying to unify its Windows 8, Windows RT and Windows Phone platforms around (what else, class) an Application Program Interface.

One great place to track what’s happening in the API world is through the work of Kevin Sundstrom, who writes for Programmable Web. Kevin tracks the new uses of APIs as well as the business of APIs. Through him, for instance, we learn that Facebook’s Instagram is now being used for an iPhone app that tells people what’s happening in their town now, and that Urban Airship Push, an API that delivers specific content to mobile users, has gotten a $25 million capital infusion.

The real value of any tech company today lies in its APIs. Amazon’s stock price is at ridiculous levels mainly because the API of its Amazon EC2 cloud is considered an industry standard.

Google bulls are quick to point toward its API policies for their call on the stock, noting that if the API for Google Plus were opened for use by others, that service might rapidly become bigger than Facebook. Apple bears are quick to note the company’s refusal to fully open its APIs as limiting that company’s growth.

The Foolish Take on APIs

Google is the obvious play for those who love APIs, but it’s not the only one. The rapid growth of the cloud makes Amazon worth looking at, even at these levels.

If Apple Inc. (NASDAQ:AAPL) were to open up use of its APIs in a more robust manner, I’d be a buyer of that stock as well. It remains the sleeping giant of the API space. And I remain highly bullish on Yahoo specifically because that company is now coming to understand the API space, and its value, under a CEO who is also a developer.

The best news is that, thanks to this quick course on APIs, you now know what keeps Facebook stock up, and why Twitter may be the year’s hot IPO. Keep your eyes peeled for API news, for API usage statistics, and prosper.

The article APIs Key To Understanding High-Priced Internet Stocks originally appeared on Fool.com and is written by Dana Blankenhorn.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!